The Pandemic Divide: Gender Inequality in Terms of Financial Inclusion in India

Purpose: This study examines how the COVID-19 pandemic impacted gender inequality in the case of financial inclusion, focusing on factors driving these disparities. Methodology: The study uses data from the World Bank's Global Findex database for the years 2017 and 2021. The Fairlie non-linear decomposition technique is applied to identify the gender gap each year and also to uncover the factors that predominantly influence the gender gap in case of financial inclusion. Findings: This study discovers a paradoxical narrative in the evolution of gender inequality in financial inclusion comparing the years 2017 and 2021. Although the gender gap got reduced in terms of formal savings in the middle era of the pandemic, persistent challenges remain in areas like deposits and the adoption of digital financial services. Despite the pandemic accelerating the adoption of digital financial services globally, the gender gap in digital finance widened in India during 2021. This reversed the earlier progress made through policies like demonetization (Ghosh & Hom Chaudhury, 2022). Our findings also emphasize the need for targeted interventions, focusing on employment, income, and education, for women to reduce the gender gap. On the other hand, card ownership, card usage, and digital transactions revealed a concerning increase in the unexplained gender gap from 2017 to 2021. These disparities suggest that despite improvements in socioeconomic factors some systemic bias continue to hinder women’s full participation. This surge in unexplained gaps in 2021 points to a critical challenge for policymakers. Implications: The findings highlight the need for targeted interventions focusing on enhancing employment opportunities for women, improving education, and ensuring equitable access to financial resources. Policymakers must address these issues to ensure digital financial growth benefits all, particularly during crises, to build a more inclusive financial system. Originality/Value: This study sheds light on the evolving nature of gender inequality in financial inclusion during a global crisis and underlines the critical need for policies to bridge the digital financial divide.